Land Tax Stability
The education of the public via mainstream media continues to grow with Jessica Irvine writing in the Herald Sun today:
“State governments do apply some land taxes, particularly on investment properties. But a major recommendation of the Henry review was for a broader land tax that could go a long way to providing state governments the revenue needed to replace inefficient taxes like stamp duty on property transfers. Stamp duty is inefficient because, as a tax on a moving house, it discourages people from moving house and downsizing to more suitable accommodation. It prevents a more efficient allocation of the housing stock that would otherwise happen.
So lesson number one: tax land.”
Matt Wade in the SMH today writes on state financing issues:
“The centrepiece of Lambert’s reform agenda was a ”stamp duty replacement tax”, levied on the value of all land, regardless of how it is used or who owns it. Axing stamp duty – a highly inefficient tax – and replacing it with the broad-based land tax would deliver a welfare benefit of $2.3 billion a year and increase NSW’s gross state product by 1.2 per cent. Lambert also called for the threshold at which businesses are levied payroll tax to be reduced so that inefficient insurance duties could be removed. This would yield a welfare gain of $400 million in NSW.”
Our many meetings with journalists are paying off.
This is not to forget the Committe of Melbourne’s important Moving Melbourne report (PDF) last week, which advocated for the makeover of Melbourne’s level crossings with Land Value Capture financing. It is one of the best written pieces by a government agency. It highlighted global LVC trends, where the resultant higher land values act as a funding mechanism for public infrastructure, closing the loop between beneficiaries and providers.
Unfortunately the report was distorted in the press, after initial good coverage in the AFR print, it was written off by 3AW and even the SMH as ‘tolling’ the level crossings, resulting in brow beating blogs like this.
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With the falling terms of trade, the record jump in job losses last quarter and uncertainty from China, we are set for interesting economic times. To think that the thousands of sacked teachers, sacked firefighters and looming asset sales at the State Government level could be avoided if the more stable Land Value Tax revenue base was used to replace Stamp Duties!
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Photo courtesy of the IMF